Assume you built a 40,000 square-foot manufacturing facility with construction costs totaling $2 million; and 20% of the total construction costs can be segregated into 5-year property and 10% can be segregated into 15-year property. The net present value of federal tax savings based on current federal tax law, a 10% present value factor and a 34% corporate tax rate is as follows.
|With Cost Segregation||Without Cost Segregation|
|Year 1||$337, 308||$25,640|
Net Present Value of Tax Savings:
|First 6 Years||$149,327|
|40 Year Life||$125,600|